What Is Financial Analytics? Skills, Jobs, Salary, and More

Financial analytics is a type of financial management that focuses on varying types and methods of inves

tments and ways to improve profitability for an organisation or an individual. To work in financial analytics, you’ll need robust technical skills that include financial modelling, valuation, analysis, forecasting, and more.

You can find financial analytics jobs in insurance companies, banks, and private investment firms. Salary varies according to job titles, employers, education, experience, and certification. 

Discover more about financial analytics and the career opportunities in this space.

What is financial analytics?

Financial analytics analyses an organisation's specific financial processes, functions, and data. It’s useful for investing, forecasting, strategic financial goal setting, and other financial decision-making to increase profitability. Financial analytics may also apply to individuals. Financial analytics professionals who work with individuals rather than companies may focus on portfolio management and guiding individuals in deciding what investments they should pursue for maximum profitability.

Professionals who work with organisations may spend more time studying economic trends related to the organisation’s location or industry and may be affected by company policies or regulations. Investment decisions for organisations may include mergers, acquisitions, stocks, bonds, and other means of financial investment that increase an organisation's profitability and valuation. 

Whether working with individuals or organisations, financial analytics provides targeted and strategic recommendations for investments that would be beneficial given past, current, and projected financial status.

Financial analytics vs data analytics

Financial analytics works exclusively with economic data used in making investment decisions for a company. Conversely, the field of data analytics may work with varying types of financial data within a company for various purposes and not solely for investments.

Both fields analyse data for an organisation, but for different reasons and in differing ways. Data analytics doesn’t always handle financial data exclusively, so someone in this field may work for companies other than those in financial analytics. Financial analytics professionals typically work in investment firms, banks, or related industries.

Technical skills 

Critical technical skills you will need when working in financial analytics include a range of accounting skills, such as bookkeeping, technical analysis, forecasting, and budgeting. Software and tools like Excel and other spreadsheets are also critical in record keeping and analysis. You may use various skills depending on where you work and the individual or organisation's goals. More specific technical skills include: 

• Valuation analysis 

• Joint venture analysis 

• Internal rate of return 

• Return on investment capital 

• Year over year 

• Net present value 

• Financial modelling 

• Corporate finance 

• Mergers and acquisition analysis 

• Leveraged buyout method 

Why financial analytics is important

Financial analytics is important because it provides individuals or organisations with guidance on where, how, why, and in which amounts to invest money. Many financial analysts deal with investment opportunities that require a great deal of market research and proficiency in understanding the economic trends and environment while weighing the pros and cons of certain investments against an individual or organisation’s financial status and objectives. It requires a deep understanding of all the factors that can affect investments and how to position a client properly within an investment decision. 

From research to execution, the financial analytics professional's job is to understand the big picture and advise clients on how and when to take action on varying investment types. In many cases, the financial stability and continuity of an organisation or individual are at stake, so financial analytics is critically important to ensure individuals or organisations make the most intelligent financial decisions given the circumstances.

Working in financial analytics

Financial analytics professionals may work for an individual or an organisation under different job titles, such as fund manager, portfolio manager, financial risk specialist, securities analyst, investment analyst, or rating analyst. These job titles fall within three broad career categories: sell-side, buy-side, or investment banks.

Those who work for the buy-side are individuals who work with private equity firms, insurance companies, or related organisations, developing investment strategies. Professionals working for the sell-side advise other financial services sales agents who sell investments like stocks and bonds and make predictions about when to buy, sell, or hold stocks. Financial analysts who work for investment banks focus on mergers and acquisitions, assessing the potential success of such decisions and making decisions based on many economic factors.

Job outlook

Financial analysts are in high demand, as businesses move towards data driven decision making. A few reasons for this projected job growth include an increasingly growing global market, changes in the economic landscape, and data and technological innovations and improvements.

Average salary

The average annual base salary for a financial analyst, according to Glassdoor, is £43,166 per year [1]. Salaries in London are the highest in the country as London is the UK's financial hub, with an average annual base salary of £50,326 per year [2]. However, you’ll find a number of jobs that fall under financial analytics, with specific focuses, at varying levels and paying differing amounts. You may also notice that factors like your education, professional experience, and certification status affect your average salary in financial analytics.

Take, for example, the difference between the jobs of a portfolio manager and a securities analyst. A portfolio manager earns an average salary of £65,683 annually [3], working with clients to manage investment accounts. A securities analyst earns an average of £37,822 a year [4], analysing, researching, and reporting on market trends, drawing on those insights to create reports to use for investment decision-making. 

Securities analysts work specifically in securities, unlike portfolio managers, who may handle many different types of investments. Both jobs require at least a bachelor’s degree in finance or a related subject, but a master’s degree is preferred. While requirements are similar, salaries differ based on job title, duties, and possible employer.

Degree options in financial analytics

Most careers in financial analytics require at least a bachelor’s degree in finance, business, or a related field, with a preference for a graduate degree in many cases. Certifications are highly recommended and a requirement in some cases, particularly if you want to move into more senior-level positions. Chartered Financial Analyst (CFA) certification is a standard global option in this profession.

Undergraduate degrees

All careers in financial analytics will require at least a bachelor’s degree. The most common degree choice in this field is finance, business, accounting, economics, or a maths or engineering discipline. You can find bachelor’s degree programs offered online, in person, or a mix of both. Some students will seek out universities known for their reputation in finance to get an advantage when graduating from their program of study. Internships and summer placements can be an advantage in this competitive field.

Postgraduate degrees

It’s not uncommon to see employers requiring postgraduate degrees for positions in financial analytics, although not essential. Individuals and organisations trust these financial professionals with their financial future, so a postgraduate degree is a good idea if you want to pursue this field as a long-term career. Most financial analysts and related jobs earn a Master of Financial Analytics (MFA) or Master of Business Administration (MBA) degree.

PhD options

A doctoral degree in finance can benefit anyone who wants to pursue a career as a researcher or educator in financial analytics or specialise in a certain area. PhDs in finance focus on economics and devising research-based methods for financial analytics. Full-time and part-time finance doctoral degree programs are available. Some standard PhD options for this field include a PhD in financial planning and financial management. 

Certifications

A common and desired certification in the field of financial analytics is the Chartered Financial Analyst, or CFA, which the CFA Institute offers. Referred to as the CFA charter, you can achieve this accolade by enrolling in the CFA program and passing the three-part exam. On-the-job training is also expected, with many companies providing graduate training schemes and financial incentives such as fee reimbursements. 

Next steps in financial analytics 

With financial analytics, organisations can make informed financial decisions that help generate profitable outcomes. With businesses becoming increasingly data-driven, financial analyst positions are in high demand.

Take charge of your future today by enrolling in online courses that can help you learn about this financial field and provide training in crucial skills you will need to be a successful professional working in financial analytics. Consider the financial analytics course Applying Data Analytics in Finance, offered on Coursera, which provides an overview of financial analytics, ideal for anyone just getting into the field. On Coursera, you can also find a Business and Financial Modeling Specialisation, which is recommended for someone with experience in the field who wants more practice using spreadsheet models and other financial modelling techniques for investment analysis or other applications.